US Dollar Quickly Erasing Gains as Brexit Headlines Looming

Today, the US dollar has observed all of its gains erased away, as Europe came up with positive news. While preparing this report, USD was traded at 94.50 and there is a certain risk revolving around USD, as recent market trend shows a greater chance for USD to fall below 93.80 region. The Italian government seems to have secured a budget deal and Euro was being traded higher throughout the day. While preparing this report, Euro was being traded closer to 1.1590, October 16th, 2018.

US financial market appears to move alongside a common theme, as US dollar kept falling along with major US stock indices and US treasuries

There is a raising concern in the market about an increase in the interest rates, which could drown growths significantly

Retail traders are quickly adjusting their positions in all of the USD pairs, as risk of further loss is looming large and Italy secures a budget deal.

Brexit headlines are on a greener side and that is reflecting in the GBP/USD pair, as it is floating freely closer to 1.3200 region.

DXY daily price index (January 2018 to October 2018)

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Apart from the inspiring news from Italy, there were positive news regarding the Brexit deal. As the Brexit deal is looming large, high hopes are raising surrounding the GBP and EUR. However, the pullback ability of Euro will largely depend upon the Italian BTP.

In addition to positive news, there were also frustrations surrounding GBP, as GBP/USD pair was expected to break above 1.3250, yet the chance has not been vanquished and GBP could still capitalize the earlier wage growth figures.

At this moment, the GBP is failing to capitalize the earlier wage growth report and it failed to break above 13250. However, the chance has not been dried away, as Brexit deal is looming large and the high hopes surrounding Brexit should be able to keep the support zone above 1.3150.

On the other hand, the USD has potentially become more vulnerable to further losses, as Italy came into a budget deal and the recent USD gain was nothing but a result of Italian political turmoil (Italy leaving Euro issue).

As all of the facts surrounding EUR are going to be resolved and a Brexit deal is reeling on to reality, the future outlook for USD does not appear to be bright and future plans could include a USD sell-off.

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